COP27: United Nations urges companies to stop Greenwashing

The United Nations High-Level Expert Group on Net Zero Emissions Commitments by Non-State Entities - Companies, Mainly Oil or Energy; financial institutions, cities and regions - presented its report to the UN Secretary-General, António Guterres, during the 27th Climate Summit (CO27), which is being held in Sharm el Sheikh (Egypt).

The document, which has been delivered to the Secretary General of the United Nations, António Guterres, focuses on greenwashing and calls for measures to end "dishonest" accounting with which some companies "evade" their responsibility to reduce their carbon footprint.

"The planet cannot afford delays, excuses and greenwashing," said Catherine McKenna, chair of the UN-appointed think tank and a former Canadian environment minister. To do this, she has requested that the "non-state" sector commit "immediately" to reduce its absolute CO2 emissions, including those associated with the value chain, almost always forgotten in the climate accounting of companies and financial entities.

What is greenwashing?

Greenwashing is a term used to describe situations where companies mislead consumers by claiming to be green or sustainable as a marketing scheme rather than a core tenet of their business model. These industries often spend more money making themselves appear sustainable than actually implementing sustainable measures in their business.

"Planet cannot afford more greenwashing"

The report presented requires that companies, in addition to local political powers, submit an annual report that reveals progress in reducing emissions of gases that warm the planet. This must be public, accessible and comparable with the data of its counterparts or competing companies.

On the other hand, the UN requires that companies do not declare themselves “net zero” while they continue to invest in fossil fuels or carry out activities whose value chain is marked by deforestation or the destruction of ecosystems.

Institutions are also urged to stop focusing on scope 1 and scope 2 emissions, that is, those they generate directly with their practical savings. To do this, scope 3 emissions, those associated with the value chain, must be included in their climate accounting books.

Although these are demands dedicated to the private sector, the experts also point to the legislators, to whom they recommend establishing minimum regulatory frameworks to avoid the "ecological laundering" of companies or local entities. The plans of companies cannot depend exclusively on their will, say the authors of the report, who call for measures that force companies to change their production models to keep the increase in global temperature below 1.5ºC.

Some very light red lines

Likewise, the report of the group of experts determines new red lines to avoid ecological bleaching. In particular, non-state entities are advised not to declare themselves 'net zero' while continuing to build or invest in fossil fuels, while deforestation and other environmentally destructive activities are deemed unacceptable.

It also advises against buying cheap credits, which often lack integrity, instead of directly reducing your own emissions throughout your value chain. High-quality credits should only be used to offset residual emissions once a non-state entity meets its short- and medium-term goals.

They should also not focus on reducing their emissions intensity rather than their absolute emissions or treat only a part of their emissions rather than taking into account all of their emissions generated along their value chain.

The report recommends against lobbying governments and authorities to undermine their climate policies or ambitions, either directly or through industry, trade associations or other bodies. The report also warns that, in order to efficiently address greenwashing and guarantee a level playing field, minimum mandatory criteria must be considered, that is, moving from voluntary initiatives to establishing a mandatory framework that regulates carbon neutrality for large companies and financial institutions.

Lead the ecological transition

Teresa Ribera, Third Vice President of the Government of Spain and Minister for the Ecological Transition and the Demographic Challenge, has pointed out that "accelerating the transition to renewable energies" to protect citizens from current crises, such as energy and food security, requires "solid, reliable and transparent planning".

"I encourage all those who have committed to net-zero emissions targets to adopt the recommendations so that they can demonstrate the integrity and seriousness of their promises," she added.

Helena Viñes, the advisor to the National Securities Market Commission (CNMV), of Spain, pointed out that cities, regions and companies in the developing world need financial support, technological assistance and training to play their role in the transition towards climate neutrality.

“Those companies and financial entities, as well as cities and regions, that adopt our recommendations will be the ones that will lead the energy transition and contribute to its acceleration. Only in this way will we ensure that we all contribute our grain of sand to reduce emissions and that all these voluntary commitments to achieve carbon neutrality are useful.